Page 150 - DMGT547_INTERNATIONAL_MARKETING

Unit 8: Pricing Decisions for International Markets

‘quick pay-back’. Trade discount is a reduction in list price given to channel members in Notes
anticipation of a job they are going to perform.
6. Standard Export Pricing Strategy: In some cases, exporter quotes the standard price or list
price that is one price for all. But still there should be some margin for negotiations as in
many markets especially in under developed countries, bargaining over prices is a part of
life. In such cases, fixed prices may serve as a starting point for negotiation. Hence, it is
desirable to keep a certain margin for the negotiations. This strategy is generally adopted
in the export of capital goods i.e. plant & machinery.
7. Cheaper Price for Original Equipment and Higher Price for Spare Parts: In certain cases it
might be useful to quote lower prices for the original equipment and charging higher
prices for spares and replacement parts to be exported later as and when required. This
strategy is useful where only the supplier of the original equipment can supply standard
spare parts. This strategy could be used for tractors, telephone equipment, defense
armaments, and railway equipment and so on.

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Caution Thus, different pricing strategies may be adopted in different markets taking into
account the level of competition, the marketing characteristics and the philosophy of the
management. Profitability anyhow cannot be ignored completely in the long run. However,
exports may be continued in the short run even below the marginal cost.

Task Visit an exporter to find out the criteria he uses to make the quote.

Self Assessment

State whether the following statements are true or false:
6. Under Market Penetration strategy, firms keep very low introductory prices.
7. A pricing strategy under which initially the price is kept very high, which is later adjusted
as per consumer feedback is referred to as Standard Export pricing strategy.
8. Under Skimming strategy, Firms keep very high initial prices to skim the market
9. The price charged for a product is the same in all markets

Caselet Microsoft Rethinks Unified Pricing Strategy

Microsoft is studying ways to offer its software at different price points around the world,
signalling a possible departure from its unified global pricing practice.
Although it has already made pricing concessions in some isolated cases, such as Thailand,
where competitive pressure from open source products had been mounting, the Redmond,
Washington-based vendor has generally stuck to a system where its products are priced
the same around the world.
Now, facing pressure for change from some customers, particularly in emerging markets,
Microsoft is working with governments in those countries to price its software in a way
Contd...

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